GIFI Liability Accounts

Definition

The 2600 to 3499 GIFI band captures present obligations arising from past events. Schedule 100 separates current liabilities, which close at item 3139, from long-term liabilities, which close at item 3450, and distinguishes third-party debt from amounts owing to shareholders and related parties. The band ends at item 3499 Total liabilities. Like the asset items, these are independent of the accounting framework used.

Key rules

• Current liabilities run 2600 to 3139: bank overdraft, trade payables and accrued liabilities, taxes payable, deferred income, the current portion of long-term debt, and current amounts due to shareholders.
• Long-term liabilities run 3140 to 3450: mortgages, bank loans beyond twelve months, bonds, deferred income taxes, and long-term amounts due to shareholders or related parties. Item 3460 Subordinated debt and item 3470 Amounts held in trust sit after that subtotal, and item 3499 Total liabilities sums everything.
• Item 2680 Taxes payable is one item for capital taxes, foreign taxes, GST/HST, current income taxes, logging taxes and sales taxes. Sales tax is presented net: GST/HST collected less input tax credits. A recoverable balance belongs on the asset side as appropriate. Do not offset unrelated tax balances without satisfying the accounting offset requirements.
• Amounts the corporation owes its shareholder or director are item 2780 when they are current and item 3260 when they are long term. Watch ITA s.15(2): an amount the corporation owes the shareholder is a payable and is the opposite of a shareholder loan receivable, which sits in assets at item 1300 or 2180.
• Item 3139 Total current liabilities and item 3450 Total long-term liabilities are computed. Item 3499 has to be reported on every GIFI, even when it is nil.

Example

Liability items a small CCPC uses, with the CRA name for each one:

Common mistakes

• Reading item 2700 as income taxes payable. Item 2700 is Short-term debt, meaning corporate loans, demand loans and notes payable shown short term. Income taxes payable belong at item 2680 Taxes payable, and item 2701 is Loans from Canadian banks.
• Using item 2750 for deferred revenue. There is no item 2750. Deferred income is item 2770 when it is current and item 3220 when it is long term.
• Using item 2962 for the current portion of long-term debt. Item 2962 is Dividends payable; the current portion of a term loan is item 2920.
• Using item 2630 for wages payable. Item 2630 is Amounts payable to members of non-profit organizations; wages payable is item 2624.
• Treating a shareholder advance as equity. Repayable advances are liabilities. A properly documented capital contribution may instead be share capital or contributed surplus.
• Netting GST/HST collected and input tax credits into a single ledger account. Keep them separate in the books; item 2680 simply shows the net.
• Leaving corporate income tax payable at the prior-year accrual after filing. The balance owed or refundable resets each year.
• Classifying an entire bank loan as current because payment is due monthly. Check contractual demand rights and covenants as well as scheduled payments before splitting current and long-term portions.

Related concepts

Liabilities feed Schedule 100 and the balance sheet. For shareholder and intercompany obligations see Shareholder Loans (ITA 15(2)). The residual interest after liabilities is GIFI Equity, and the full range map is in GIFI Codes by Range, With the Most Used Codes.